For eBay, partnership with Sotheby’s is about online live auctions

By Andria Cheng

eBay

The race to compete for global consumers’ attention and money is bringing eBay Inc. and Sotheby’s together for the second time, as the companies partnered to deliver online live auctions that will offer wealthy bidders the chance to buy priceless art online.

For eBay, which ended its broadcasts of live auctions in 2008 and has its auction sales automated to end at a set time, the deal signals its push to return to the live auctions market. Online live auctions have been thriving thanks to more sophisticated technology and a growing global middle class eager to snap up collectibles. In May, eBay inked a deal with online live-auction marketplace Invaluable to showcase merchandise from more than 2,000 auction houses to eBay’s network of 145 million active buyers in 190 countries.

Monday’s announcement also gives Sotheby’s, whose customers reportedly number at 100,000, access to eBay’s much larger pool of customers.

While auction-generated sales have declined to about a quarter of eBay’s
/quotes/zigman/76117/delayed/quotes/nls/ebayEBAY business with the rest of its inventory either new or sold for a fixed price, the company’s collectibles business still “lends to” the auction format, said Gene Cook, general manager of emerging verticals (eBay parlance for product categories) for eBay Marketplaces, in an interview.

Seeking new customers and finding a new growth avenue is crucial for eBay as it faces increased competition from other players led by Amazon
/quotes/zigman/63011/delayed/quotes/nls/amznAMZN, and its own sales growth has slowed. Pacific Crest cut its rating on the stock on Sunday ahead of its earnings report this week, citing concerns including slowing sales for its sellers and lack of potential positive catalysts.

“We are looking to go up market and adding the concept of live auction,” Cook said. “We’ve been surprised and pleased at the speed that people are becoming comfortable with making high-end purchases online. We want to take it up a notch. This is going to open up a whole new opportunity. The timing is right both from a technology and customer standpoint. This is a big deal for us.”

EBay, whose prior 2002 relationship with Sotheby’s
/quotes/zigman/241211/delayed/quotes/nls/bidBID lasted for a little over a year, pointed to more than 3,500 auctions on its site every day that close above $5,000 and many collectibles over $100,000 that people bought. Sotheby’s, for its part, said its online sales of lots jumped 36% last year. Cook said the deal with Sotheby’s will target art, antiques and other collectibles valued between $5,000 and $100,000, which he described as “still an accessible price point” (Sotheby’s will still host its own super high-end collectibles sales). The categories at eBay will also include wine, jewelry and watches, he said, declining to offer specifics about the terms of the agreement. Sotheby’s didn’t respond to a request seeking additional comment.

“We are getting feedback from our customers,” Cook said. “One of the reasons we decided to double down on this opportunity is we are seeing very broad demand geographically for this type of inventory. It’s not just an Asia and U.S. opportunity.”

Cook said eBay will work closely with Sotheby’s on details from photography to product description and storytelling and will have dedicated teams working on the project. “The things that are going to make it different this time (versus 2002) is we are going to offer a richer buying experience,” he said.

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About Behind the Storefront

Behind the Storefront is a blog about all things retail. It’s aimed at investors, shoppers and anyone else with a passion for learning about what drives consumer behavior. Hosted by Andria Cheng, Behind the Storefront will cover the business, brands and shopping behavior that’s behind some of the biggest companies, and largest employers, in the world. You can reach Andria at Acheng@marketwatch.com.